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The role of Exemption Clauses, Disclaimers and Indemnities in SA

The role of Exemption Clauses, Disclaimers and Indemnities in SA

The role of Exemption Clauses, Disclaimers and Indemnities in SA

September 8, 2017Tersia Landsberg

This article briefly looks at the role, nature, and effect of exemption clauses, disclaimers and indemnities (collectively referred to as ‘clauses’ herein after) in South Africa.

A brief overview

A clause excluding or limiting the liability on the part of a person or company contained in a written agreement is referred to as an exemption clause, and when it is displayed by way of notice it is referred to as a disclaimer notice.

The ‘benefiting party’ is consequently protected from claims such as loss, injury, negligence, and damages. It is becoming more evident that such clauses can have burdensome implications for the aggrieved party and it is for this reason that the duty of testing their enforceability has been placed on our Courts.

The CPA and the Courts

The Consumer Protection Act (CPA) significantly deals with exemption clauses, disclaimers, and indemnities and prescribes certain fundamental “consumer rights” which impact on how our Courts will approach them in the future.

The right to “fair, just and reasonable contract terms” may influence the validity and enforceability of these clauses, as any term that is not in line with the requirements of the CPA may be declared unenforceable and may then be set aside by the Court. A Court, having regarded the merits of the matter, may deliver an order that it deems just and equitable in the instance such as compensation for losses and/or expenses.

Attracting attention to clauses

Where an agreement is subject to a term, condition or notice that may be deemed to be unfair, unreasonable, or unjust in terms of the CPA, the fact, nature and effect of such term, condition or notice must be brought to the attention of the consumer in such a manner that it will likely attract the attention of an “ordinarily alert consumer” in that circumstance.

The term, condition or notice must be clearly visible, unambiguous, and understandable before the consumer concludes an agreement or enters a facility. It is the supplier’s responsibility to draw the consumer’s attention to any fact, nature and potential effect of any risks. It is important to note that a consumer will only be able to make an informed decision prior to the conclusion of a transaction if he/she is in a position to understand the provision or notice.

A case study as benchmark

Referencing to what may be the benchmark case concerning exemption clauses, the court held in Afrox Healthcare Ltd v Strydom 2002 (6) SA 21 (SCA) that the exclusion of gross negligence in an exemption clause is contrary to public policy. The case dealt with an exemption clause contained in a hospital admission document. The CPA is in agreement with this decision in so far as it prohibits terms that purport to “limit or exempt a supplier of goods or services from any liability for a loss directly or indirectly attributable to the gross negligence of the supplier or any person subject to the supplier’s control.”.

In conclusion, the CPA does not exclude the inclusion of an exemption clause in an agreement or notice but does offer the opportunity for an aggrieved party to challenge the enforceability of such a clause.